RFID revolution years away, says Gartner

Gartner's supply chain management supremo has poured cold water on claims that the great radio frequency identification...

Gartner's supply chain management supremo has poured cold water on claims that the great radio frequency identification revolution is now upon us, arguing that suppliers' RFID strategies are still missing the big picture when it comes to supply chain and business process.

Speaking at the Symposium 2004 conference in Sydney, Australia, last week, Brian Zrimsek, Gartner research vice-president for ERP and supply chain, warned that current RFID deployments merely enhanced established business processes.

Zrimsek said that Wal-Mart's RFID diktat to its suppliers did not meet a critical RFID-centric business process test known as "act-on-fact".

Act-on-fact refers to when an enterprise in a supply chain is literally "able to execute an order the moment it comes in" rather than in minutes, hours or days, according to Zrimsek.

"I don't think we will see mass RFID until at least 2010. RFID trophy case Wal-Mart is working on a tactical rather than strategic solution for its supply chain management with RFID. It's basically another labelling system," he said.

However, Zrimsek said suppliers should watch supply chain and sensory technology developments carefully because heavyweights like Wal-Mart were ultimately seeking to redefine supplier relationships so they themselves held no inventory - just goods on consignment.

"The question is whether you can tag stuff at an individual stock-keeping unit level so merchandise is held on consignment, and you pay the supplier when you sell the product rather than purchasing the product from the supplier. The question is whether you can free up in the case of Wal-Mart the $20bn (£11bn) or so of capital for inventory and put that into something else. This is the end game for Wal-Mart."

In terms of the IT supplier landscape, Zrimsek warned of a chasm still existing between small, specialised supply chain firms and big ERP players when it came to combining fitness for purpose and scalability.

"Supply chain has not been a great focus for SAP," he said. "They are still very enterprise-centric. When they released the new version of R3 they called it R3 Enterprise, not R3 Supply Chain."

Zrimsek said IT managers should immediately start trialling RFID and other sensory technologies as tactical point solutions, but ultimately be prepared for the uncertainty of the act-on-fact business model.

"Maybe we need a Dr Seuss book called act-on-fact to get it through to IT supplier and enterprise management," Zrimsek said.

Julian Bajkowski writes for Computerworld Today

Read more on Business applications